Right-to-appraisal auto insurance bills filed in Illinois

Two companion bills that would create a right-to-appraisal clause in Illinois auto insurance policies, if enacted, have been introduced in both the House and Senate. 

Sen. Julie Morrison (D-29) introduced SB 2708 on Tuesday, and Rep. Tracy Katz Muhl (D-28) introduced HB 4160 in the House on Wednesday. Both bills were read for the first time, with the Senate bill sent to the Assignments Committee and the House bill sent to the Rules Committee. 

Morrison sits on the Senate Insurance Committee and Katz Muhl on the House Insurance Committee, where each bill will need to pass through before moving to a floor vote. 

The bills amend the Illinois Insurance Code to require every auto insurance policy to have a right-to-appraisal clause. 

“If a dispute arises regarding the amount of a loss or a settlement offer, either party may submit a written demand for appraisal within seven calendar days after receiving the demand,” the bills say. 

It requires that each party select a competent and disinterested appraiser and notify the opposing party in writing of the selection. 

An umpire shall be brought in if an agreement of loss is not decided within five calendar days. 

Either party may petition a court of competent jurisdiction or request assistance from the Department of Insurance to appoint a suitable umpire if there is a disagreement. 

The bill says that both parties will bear the cost of their own appraiser. However, the cost of the umpire shall be shared equally between the parties unless the final appraisal award is 10% more favorable to the policyholder or third-party claimant compared to the insurer’s last written offer before the appraisal. In that case, the insurer would pay all appraisal and umpire fees. 

Insurers would face a civil penalty of up to $5,000 per violation for failing to comply with the appraisal provisions. Repeated violations could result in further disciplinary measures, including suspension or revocation of the insurer’s authority to write automobile insurance policies in the state. 

Beth Seberger, president and legislative co-chair of the Alliance of Automotive Service Providers of Illinois (AASPI), said Wednesday that the bill is completely consumer-focused. 

“You should agree with this bill; it was written for all of us,” Seberger said. “It was not written against insurance.” 

She added that the bills shouldn’t impact insurance companies that do the right things.  

Seberger said she’s not a politician but a mother who runs a third-generation collision repair business. 

It is painful to watch customers be pressured to pay out of pocket for needed repairs, she said.

The language in the bill that sets timelines for each step in the appraisal process is critical because, while some insurance companies have clauses, the process can drag on for months, Seberger said.

“The situation gets dicey, you don’t want to charge the customer storage, but it is not your customer’s problem that the insurance company is dragging it out,” she said. “They owe for storage unless the consumer is the cause for the delay.”

Seberger said she is thankful to Morrison and Katz Muhl for sponsoring the bills. 

“This is a David against Goliath fight in this state,” Seberger said. 

Allstate and State Farm are both headquartered in Illinois. 

However, she said there is some hope as Illinois is expected to see insurance packages moving through the legislature this year. 

Auto insurance could be included in legislation that Illinois Gov. JB Pritzker has called for after State Farm hiked homeowners insurance by 27.2% earlier this month. 

The rally around change could focus on a bill, SB0268, that proposes rate-setting practices for both auto and home insurance. Illinois is the only state without an insurance rate review process. 

Illinois Secretary of State Alexi Giannoulias has also launched a statewide campaign focused on preventing insurance companies from using socioeconomic data to charge residents higher auto insurance rates. 

This data could include credit scores, zip codes, and age, according to a press release.

Right-to-appraisal laws were passed earlier this year in both Washington and Texas after more than six years of lobbying in each state.

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